[May 13, 2005]

Traditional IVR in Its �Twilight Years?�

By David Sims, TMCnet CRM Alert Columnist

Independent market analyst Datamonitor expects revenues from proprietary touchtone Interactive Voice Response in North America, Europe, the Middle East and Africa to decrease by more than 35% through 2009 while s pending on open-standards IVR licenses will grow from $166 million to $332 million in North America and EMEA.

According to a new report, a growing number of businesses are opting to invest in emerging open-standard IVR platforms such as Voice-XML and SALT to make better use of web infrastructure, improve functionality and potentially graduate to speech technology to further improve routing, transactions and self-service capabilities.

Datamonitor believes spending on traditional IVR licenses will dip from $277 million to $179 million in North America and EMEA by 2009. 

“‘Traditional’ touchtone interactive voice response – used by businesses over the past two decades for the purposes of phone-based routing and self-service functionality – is firmly in its twilight years,” according to Datamonitor’s new report, “ The Definitive Guide to the IVR Marketplace: North America and EMEA.”

Traditional IVR is based on proprietary languages. As such, maintenance, upgrades and back-end data integration is expensive, complex and causes vendor lock-in.

Datamonitor expects North American and EMEA businesses spending in open-standards IVR platforms to double in the next five years to over $330 million. Between 2005-2009, Datamonitor’s crystal ball says, average annual spending on speech-enabled IVR in the US and EMEA markets will increase by 13.4%

“The emergence of open-standards is a natural evolution for the IVR and will drastically improve the functionality and availability of higher quality phone-based applications in the market,” says Daniel Hong, Voice Business Analyst at Datamonitor and author of the study. “In addition, open-standards IVR platforms liberate businesses from vendor lock-in and enable application portability to other similar open-standards platforms.”

All major IVR platform vendors in North America and EMEA, which include the likes of IBM, Avaya, Microsoft, Cisco, Unisys, Hewlett-Packard, Nortel and Syntellect offer open-standards based platforms and have implemented IVR systems for household name companies.

Many IVR platform vendors including Unisys, Cisco, Syntellect, Nortel and Avaya will have speakers at TMC’s Speech-World conference in Dallas from May 24-26 th.

Although, at the core, Voice-XML and SALT enable voice user interface and speech application design, many businesses today are deploying these open-standards IVR platforms with touchtone rather than speech and still using the benefits of open-standards and web development capabilities.

However through the next five years, as they become more familiar with Voice-XML and SALT, Datamonitor is confident many will choose to speech-enable their Voice-XML or SALT IVR platforms and deploy speech applications.

“Businesses are making more informed decisions on the strategic direction of their IT investments,” says Hong. “To this end, a large number are employing a cap-growth strategy when it comes to IVR and speech technology. These businesses are likely to roll-out speech in small deployments to mitigate risk while forming best practices through 2009.”

The challenge for these businesses in making the transition to speech, Hong thinks, is “firmly rooted in the complex nature and high costs associated with speech application design and implementation.”
 
However, in Datamonitor’s view, the next five years will witness a sharp spike in the availability of intuitive toolsets, reusable components and packaged speech applications that will drive the uptake in speech-enabled, open-standard IVR platforms.

David Sims is contributing editor and CRM Alert columnist for TMCnet.

To discover how contact centers can save money and increase productivity by making the switch to IP Telephony, be sure to attend TMC's IP Contact Center Summit May 24-26, 2005, in Dallas, Texas. IP Contact Center Summit is co-located with the Speech-World conference, where you can get expert guidance in the deployment of speech technologies to strengthen customer relationships.